Following the change, there will be several new characters at the end of the share class name, to indicate:

Transcription

1 Schroder International Selection Fund Société d Investissement à Capital Variable 5, rue Höhenhof, L-1736 Senningerberg Grand Duchy of Luxembourg Tel: Fax: IMPORTANT: This letter is important and requires your immediate attention. If you have any questions about the content of this letter, you should seek independent professional advice. The directors of Schroder International Selection Fund accept full responsibility for the accuracy of the information contained in this letter and confirm, having made all reasonable enquiries, that to the best of our knowledge and belief there are no other facts the omission of which would make any statement misleading. 11 August 2018 Dear Shareholder, Schroder International Selection Fund share class designations We are pleased to inform you that following a review of our share class offering, the board of directors of Schroder International Selection Fund has decided to enhance the naming convention that we use for all distribution share classes with effect from 11 September This change will make it easier for you to identify the key characteristics of the distribution share classes that you are holding. The attached schedule provides the old and new names for each of Schroders distribution share classes that are being offered to the public in Hong Kong. Following the change, there will be several new characters at the end of the share class name, to indicate: Distribution frequency (M = monthly, Q = quarterly, S = semi-annual, A = annual) Distribution type (F = fixed or V = variable) Currency carry (C) 1 Different distribution rates - the actual fixed percentage or amount will not be displayed in the name, instead a numerical suffix will differentiate the share classes (e.g. 2, 3, n) For the avoidance of doubt, the change will not affect the existing distribution characteristics of the share classes; the change is simply to indicate those characteristics within the share class name itself. There will be no changes to ISIN codes or to the naming convention of Accumulation share classes. All other key features of the Fund will remain the same. Any expenses incurred directly as a result of making this change will be borne by Schroder Investment Management (Europe) S.A., the Company s management company. 1 This refers to the premium or discount that may apply to the distribution. Distributions may include a premium when the interest rate of a currency hedged share class is higher than the fund's base currency interest rate. Consequently when the interest rate of a currency hedged share class is lower than the fund's base currency interest rate, the dividend may be discounted. The level of premium or discount is determined by differences in interest rates and is not part of the fund's investment objective or investment policy. R.C.S. Luxembourg B For your security telephone conversations may be recorded

2 Page 2 of 2 If you have any questions or would like more information, please contact your usual professional advisor or Schroder Investment Management (Hong Kong) Limited at Level 33, Two Pacific Place, 88 Queensway, Hong Kong or calling the Schroders Investor Hotline on (+852) Yours faithfully, Cord Rodewald Authorised Signatory Alastair Woodward Authorised Signatory

3 Page 1 of 4 Schedule Fund Asian Bond Total Return Current name of distribution share classes New name of distribution share classes ISIN Codes A1 Distribution EUR A1 Distribution EUR MV LU A Distribution HKD A Distribution HKD MV LU A Distribution A Distribution MV LU A1 Distribution A1 Distribution MV LU D Distribution D Distribution MV LU A1 Distribution EUR Hedged A1 Distribution EUR Hedged MV LU Asian Dividend A Distribution A Distribution MF LU Maximiser * A Distribution AUD A Distribution AUD MF LU A Distribution EUR A Distribution EUR MF LU A Distribution EUR Hedged A Distribution EUR Hedged MF LU A1 Distribution EUR Hedged A1 Distribution EUR Hedged MF LU A Distribution AUD Hedged A Distribution AUD Hedged MFC LU Asian Equity Yield Asian Local Currency Bond Asian Opportunities Asian Total Return BRIC (Brazil, Russia, India, China) China Opportunities A Distribution GBP A Distribution GBP AV LU A Distribution A Distribution MF LU A1 Distribution A1 Distribution MF LU A Distribution A Distribution MV LU A Distribution EUR Hedged A Distribution EUR Hedged MV LU A Distribution A Distribution AV LU A Distribution GBP A Distribution GBP AV LU A Distribution GBP A Distribution GBP AV LU A Distribution EUR A Distribution EUR AV LU A Distribution HKD A Distribution HKD QV LU Emerging Asia A Distribution GBP A Distribution GBP AV LU Emerging Europe A Distribution GBP A Distribution GBP AV LU A Distribution A Distribution AV LU Emerging Markets A Distribution A Distribution AV LU Emerging Markets Debt Absolute Return A Distribution A Distribution QF LU A1 Distribution A1 Distribution MF LU A Distribution EUR Hedged A Distribution EUR Hedged QF LU A1 Distribution EUR Hedged A1 Distribution EUR Hedged MF LU A Distribution GBP Hedged A Distribution GBP Hedged AV LU * The name Dividend Maximiser refers to the investment objective of the fund to enhance the fund dividend by generating extra income from selling covered call options on the underlying equity portfolio and this may reduce the potential capital growth and future income of the fund. It does not suggest that the manager would aim at seeking the highest possible dividends for the fund.

4 Page 2 of 4 Emerging Multi- Asset Income A1 Distribution AUD Hedged A1 Distribution AUD Hedged MF LU A Distribution A Distribution MF LU A1 Distribution A1 Distribution MF LU A Distribution AUD Hedged A Distribution AUD Hedged MFC LU A Distribution EUR Hedged A Distribution EUR Hedged QF LU A Distribution HKD A Distribution HKD MF LU EURO Bond A Distribution A Distribution QF LU A1 Distribution A1 Distribution QF LU EURO Corporate Bond A Distribution A Distribution SF LU A1 Distribution A1 Distribution SF LU EURO Equity A Distribution A Distribution AV LU EURO Government Bond A Distribution A Distribution AV LU EURO Short Term Bond A Distribution A Distribution AV LU European Dividend Maximiser* A Distribution A Distribution QF LU A1 Distribution A1 Distribution QF LU A Distribution USD Hedged A Distribution USD Hedged MF LU European Value A Distribution A Distribution AV LU European Large Cap A Distribution A Distribution AV LU A Distribution GBP A Distribution GBP AV LU European Smaller Companies A Distribution A Distribution AV LU Frontier Markets Equity A Distribution A Distribution AV LU Global Bond A Distribution A Distribution AV LU A Distribution EUR Hedged A Distribution EUR Hedged QF LU A1 Distribution EUR Hedged A1 Distribution EUR Hedged QF LU Global Corporate Bond Global Credit Duration Hedged Global Credit Income A Distribution A Distribution MV LU A1 Distribution A1 Distribution MV LU A Distribution EUR Hedged A Distribution EUR Hedged QF LU A1 Distribution EUR Hedged A1 Distribution EUR Hedged QF LU A1 Distribution AUD Hedged A1 Distribution AUD Hedged MVC LU A Distribution RMB Hedged A Distribution RMB Hedged MFC LU A Distribution A Distribution QF LU A1 Distribution A1 Distribution QF LU A Distribution USD Hedged A Distribution USD Hedged AV LU A Distribution A Distribution MF LU A Distribution HKD A Distribution HKD MF LU A Distribution EUR Hedged A Distribution EUR Hedged QF LU A Distribution GBP Hedged A Distribution GBP Hedged MF LU

5 Page 3 of 4 Global Dividend Maximiser* A Distribution AUD Hedged A Distribution AUD Hedged MFC LU A Distribution RMB Hedged A Distribution RMB Hedged MFC LU A Distribution A Distribution QF LU A1 Distribution A1 Distribution QF LU A Distribution EUR Hedged A Distribution EUR Hedged QF LU A1 Distribution EUR Hedged A1 Distribution EUR Hedged QF LU A Distribution AUD Hedged A Distribution AUD Hedged MFC LU A Distribution RMB Hedged A Distribution RMB Hedged MFC LU Global Emerging Market Opportunities A Distribution A Distribution AV LU Global Energy A Distribution EUR A Distribution EUR AV LU A Distribution GBP A Distribution GBP AV LU Global Equity Alpha A Distribution GBP A Distribution GBP AV LU Global Equity Yield A Distribution GBP A Distribution GBP AV LU A Distribution A Distribution MF LU A1 Distribution A1 Distribution MF LU A Distribution HKD A Distribution HKD MF LU Global Gold A Distribution A Distribution AV LU A Distribution GBP Hedged A Distribution GBP Hedged AV LU Global High Yield Global Inflation Linked Bond Global Multi- Asset Income A Distribution A Distribution MV LU A1 Distribution A1 Distribution MF LU A Distribution EUR Hedged A Distribution EUR Hedged QV LU A1 Distribution EUR Hedged A1 Distribution EUR Hedged QV LU A1 Distribution AUD Hedged A1 Distribution AUD Hedged MVC LU A Distribution AUD Hedged A Distribution AUD Hedged MVC LU A Distribution HKD A Distribution HKD MV LU A Distribution A Distribution QV LU A1 Distribution A1 Distribution QV LU A Distribution A Distribution MF LU A1 Distribution A1 Distribution MF LU A Distribution EUR Hedged A Distribution EUR Hedged QV LU A1 Distribution EUR Hedged A1 Distribution EUR Hedged QV LU A Distribution HKD A Distribution HKD MF LU A Distribution GBP Hedged A Distribution GBP Hedged MF LU A Distribution AUD Hedged A Distribution AUD Hedged MFC LU A Distribution RMB Hedged A Distribution RMB Hedged MF LU

6 Page 4 of 4 Global Cities Real Estate # A Distribution EUR A Distribution EUR SV LU Global Smaller Companies A Distribution A Distribution AV LU Global Sustainable Growth A Distribution EUR Hedged A Distribution EUR Hedged QV LU Global Target Return A Distribution A Distribution MF LU A Distribution AUD Hedged A Distribution AUD Hedged MFC LU A Distribution EUR Hedged A Distribution EUR Hedged MF LU A Distribution HKD A Distribution HKD MF LU A Distribution RMB Hedged A Distribution RMB Hedged MFC LU Greater China A Distribution GBP A Distribution GBP AV LU Hong Kong Dollar Bond A Distribution A Distribution MV LU Japanese Equity A Distribution A Distribution AV LU Japanese Opportunities A Distribution A Distribution AV LU Latin American A Distribution GBP A Distribution GBP AV LU A Distribution A Distribution AV LU Middle East A Distribution A Distribution AV LU QEP Global Active Value A Distribution A Distribution AV LU Strategic Bond A Distribution A Distribution MV LU A Distribution EUR Hedged A Distribution EUR Hedged QV LU A1 Distribution EUR Hedged A1 Distribution EUR Hedged QV LU A Distribution GBP Hedged A Distribution GBP Hedged AV LU Taiwanese Equity A Distribution A Distribution AV LU UK Equity A Distribution USD A Distribution USD AV LU A Distribution A Distribution AV LU US Dollar Bond A Distribution A Distribution QF LU A Distribution EUR Hedged A Distribution EUR Hedged QF LU A1 Distribution EUR Hedged A1 Distribution EUR Hedged QF LU A Distribution GBP Hedged A Distribution GBP Hedged QV LU A1 Distribution A1 Distribution QV LU US Large Cap A Distribution A Distribution AV LU A Distribution GBP A Distribution GBP AV LU US Small & Mid- Cap Equity A Distribution A Distribution AV LU US Smaller Companies A Distribution A Distribution AV LU # The fund is not authorized by the SFC under the Code on Real Estate Investment Trusts.

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8 Schroder International Selection Fund Société d Investissement à Capital Variable 5, rue Höhenhof, L-1736 Senningerberg Grand Duchy of Luxembourg Tel: Fax: IMPORTANT: This letter is important and requires your immediate attention. If you have any questions about the content of this letter, you should seek independent professional advice. The directors of Schroder International Selection Fund accept full responsibility for the accuracy of the information contained in this letter and confirm, having made all reasonable enquiries, that to the best of our knowledge and belief there are no other facts the omission of which would make any statement misleading. 28 February 2018 Dear Shareholder, Schroder International Selection Fund (the Company ) Currency Hedged Shares The Company offers shares in its sub-funds (the Funds ) in a range of currencies to assist Shareholders in managing their exposure to changes in exchange rates. Given the cost and effort involved in offering a currency hedging service on currency hedged Share Classes, the board of directors of the Company has decided to introduce a fee on all currency hedged Share Classes (the Hedging Charge ) of up to 0.03% per annum of the net asset value per share with effect from 30 March 2018 (the Effective Date ). The Hedging Charge will be payable to the Company's management company, Schroder Investment Management (Luxembourg) S.A. (the Management Company ), which provides the currency hedging service. The ongoing charge figures of the currency hedged Share Classes of the Funds will increase as a result of the introduction of the Hedging Charge. Please refer to the Appendix to this letter for the estimated ongoing charge figures of the currency hedged Share Classes of the Funds. All other key features of the Funds, including other fees chargeable in respect of the Funds and the risk profile of the Funds, will remain the same. The introduction of the Hedging Charge will not result in any change in the operation and/or manner in which the Funds are being managed and will not materially prejudice the rights or interests of the existing Shareholders. The Hong Kong offering documents of the Company (comprising the Prospectus, Hong Kong Covering Document and Product Key Facts Statements) will be revised in due course to reflect the above changes. The Hong Kong offering documents are available free of charge at 1 or upon request from the Hong Kong Representative of the Company, Schroder Investment Management (Hong Kong) Limited (the Representative ) at Level 33, Two Pacific Place, 88 Queensway, Hong Kong. We hope that you will choose to remain invested in the currency hedged Share Classes of the Funds following these changes, but if you wish to redeem your holding or to switch into a non-currency hedged Share Class of the Funds authorized by the Securities and Futures Commission ( SFC ) 2 before the Effective Date you may do so at any time up to and including the deal cut-off at 5:00 p.m. Hong Kong time on 29 1 This website has not been reviewed by the SFC. 2 SFC authorization is not a recommendation or endorsement of a scheme nor does it guarantee the commercial merits of a scheme or its performance. It does not mean the scheme is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors. R.C.S. Luxembourg B For your security telephone conversations may be recorded

9 Page 2 of 5 March We will execute your redemption or switch instructions in accordance with the provisions of the Company's Prospectus, free of charge, although in some countries local paying agents, correspondent banks or similar agents might charge transaction fees. Local agents might also have a local deal cut-off which is earlier than that described above, so please check with them to ensure that your instructions reach the Representative in Hong Kong before the deal cut-off at 5:00 p.m. Hong Kong time on 29 March Costs of making these changes including regulatory and shareholder communication costs will be borne by the Management Company. If you have any questions or would like more information, please contact your usual professional advisor or the Representative at Level 33, Two Pacific Place, 88 Queensway, Hong Kong or calling the Schroders Investor Hotline on (+852) Yours faithfully, Cord Rodewald Authorised Signatory Alastair Woodward Authorised Signatory

10 Page 3 of 5 Appendix Fund Share Classes Current ongoing charge figures over a year 3 Asian Bond Absolute Return Class A EUR Hedged Acc 1.62% 1.65% Class A1 EUR Hedged Acc 2.02% 2.05% Class A1 EUR Hedged Dis 2.02% 2.05% Class A GBP Hedged Dis 1.62% 1.65% Asian Dividend Maximiser Class A EUR Hedged Dis 1.97% 2.00% Class A AUD Hedged Dis 1.97% 2.00% Class A1 EUR Hedged Dis 2.47% 2.50% Asian Local Currency Bond Class A EUR Hedged Dis 1.26% 1.29% Asian Total Return Class A EUR Hedged Acc 1.87% 1.90% Emerging Markets Class A EUR Hedged Acc 1.88% 1.91% Class A AUD Hedged Acc 1.88% 1.91% Emerging Markets Debt Absolute Return Emerging Multi-Asset Income Class A EUR Hedged Dis 1.87% 1.90% Class A EUR Hedged Acc 1.87% 1.90% Class A1 EUR Hedged Acc 2.27% 2.30% Class A1 EUR Hedged Dis 2.27% 2.30% Class A GBP Hedged Dis 1.87% 1.90% Class A AUD Hedged Acc 1.87% 1.90% Class A1 AUD Hedged Dis 2.27% 2.30% Class A EUR Hedged Dis 1.66% 1.69% Class A AUD Hedged Dis 1.66% 1.69% EURO Corporate Bond Class A EUR Hedged Acc 1.05% 1.08% Class A USD Hedged Acc 1.05% 1.08% EURO Equity Class A USD Hedged Acc 1.85% 1.88% Class A GBP Hedged Acc 1.85% 1.88% European Dividend Class A USD Hedged Dis 1.87% 1.90% Maximiser * European Smaller Class A USD Hedged Acc 1.87% 1.90% Companies Global Bond Class A EUR Hedged Dis 0.95% 0.98% Class A EUR Hedged Acc 0.95% 0.98% Class A1 EUR Hedged Acc 1.50% 1.53% Class A1 EUR Hedged Dis 1.50% 1.53% Class A USD Hedged Acc 0.95% 0.98% Global Cities Real Estate Class A EUR Hedged Acc 1.86% 1.89% Estimated ongoing charge figures over a year taking into account the introduction of the Hedging Charge 4 3 The ongoing charges figure is based on the annualised expenses for the interim period ended 30 June This figure may vary from year to year. 4 The ongoing charges figure is an estimate based on the annualized expenses for the interim period ended 30 June 2017 with adjustments to reflect the introduction of the Hedging Charge with effect from the Effective Date. The actual figure may be different from this estimated figure and may vary from year to year. For the avoidance of doubt, the Hedging Charge will not exceed 0.03% per annum of the net asset value per share. The name Dividend Maximiser refers to the investment objective of the fund to enhance the fund dividend by generating extra income from selling covered call options on the underlying equity portfolio and this may reduce the potential capital growth and future income of the fund. It does not suggest that the manager would aim at seeking the highest possible dividends for the fund. The fund is not authorized by the SFC under the Code on Real Estate Investment Trusts.

11 Page 4 of 5 Global Climate Change Equity Class A1 EUR Hedged Acc 2.36% 2.39% Class A EUR Hedged Acc 1.87% 1.90% Class A1 EUR Hedged Acc 2.37% 2.40% Global Corporate Bond Class A EUR Hedged Dis 1.05% 1.08% Class A EUR Hedged Acc 1.05% 1.08% Class A1 EUR Hedged Acc 1.50% 1.53% Class A1 EUR Hedged Dis 1.50% 1.53% Class A AUD Hedged Acc 1.05% 1.08% Class A1 AUD Hedged Dis 1.50% 1.53% Global Credit Duration Hedged Class A USD Hedged Dis 1.09% 1.12% Class A USD Hedged Acc 1.09% 1.12% Class A1 USD Hedged Acc 1.54% 1.57% Global Credit Income Class A AUD Hedged Dis 1.49% 1.52% Class A EUR Hedged Acc 1.49% 1.52% Class A EUR Hedged Dis 1.49% 1.52% Glass A GBP Hedged Dis 1.49% 1.52% Global Dividend Maximiser * Class A EUR Hedged Dis 1.86% 1.89% Class A EUR Hedged Acc 1.86% 1.89% Class A1 EUR Hedged Dis 2.36% 2.39% Class A AUD Hedged Dis 1.86% 1.89% Global Energy Class A EUR Hedged Acc 1.86% 1.89% Global Equity Class A AUD Hedged Acc 1.63% 1.66% Global Gold Class A EUR Hedged Acc 1.88% 1.91% Class A GBP Hedged Dis 1.88% 1.91% Global High Yield Class A EUR Hedged Dis 1.30% 1.33% Class A EUR Hedged Acc 1.30% 1.33% Class A1 EUR Hedged Acc 1.75% 1.78% Class A1 EUR Hedged Dis 1.75% 1.78% Class A AUD Hedged Dis 1.30% 1.33% Class A1 AUD Hedged Dis 1.75% 1.78% Global Inflation Linked Bond Class A USD Hedged Acc 0.95% 0.98% Class A1 USD Hedged Acc 1.50% 1.53% Global Multi-Asset Income Class A EUR Hedged Dis 1.58% 1.61% Class A EUR Hedged Acc 1.58% 1.61% Class A1 EUR Hedged Acc 2.08% 2.11% Class A1 EUR Hedged Dis 2.08% 2.11% Class A GBP Hedged Dis 1.58% 1.61% Class A GBP Hedged Acc 1.58% 1.61% Class A AUD Hedged Dis 1.58% 1.61% Global Sustainable Growth Class A EUR Hedged Acc 1.69% % 6 Class A EUR Hedged Dis 1.69% % 6 Japanese Equity Class A EUR Hedged Acc 1.60% 1.63% Class A1 EUR Hedged Acc 2.35% 2.38% 5 The ongoing charges figure is an estimate based on the annualized expenses for the interim period ended 30 June 2017 with adjustments to reflect the reduction of management fee with effect from 2 November The actual figure may be different from this estimated figure and may vary from year to year. 6 The ongoing charges figure is an estimate based on the annualized expenses for the interim period ended 30 June 2017 with adjustments to reflect the reduction of management fee with effect from 2 November 2017 and the introduction of the Hedging Charge with effect from the Effective Date. The actual figure may be different from this estimated figure and may vary from year to year. For the avoidance of doubt, the Hedging Charge will not exceed 0.03% per annum of the net asset value per share.

12 Page 5 of 5 Class A USD Hedged Acc 1.60% 1.63% Class A1 USD Hedged Acc 2.35% 2.38% Japanese Opportunities Class A EUR Hedged Acc 1.86% 1.89% Class A1 EUR Hedged Acc 2.36% 2.39% Class A USD Hedged Acc 1.86% 1.89% Class A1 USD Hedged Acc 2.36% 2.39% Japanese Smaller Companies Class A EUR Hedged Acc 1.87% 1.90% Class A USD Hedged Acc 1.87% 1.90% QEP Global Active Value Class A EUR Hedged Acc 1.60% 1.63% Strategic Bond Class A EUR Hedged Dis 1.30% 1.33% Class A EUR Hedged Acc 1.30% 1.33% Class A1 EUR Hedged Acc 1.75% 1.78% Class A1 EUR Hedged Dis 1.75% 1.78% Class A GBP Hedged Dis 1.30% 1.33% UK Equity Class A EUR Hedged Acc 1.60% 1.63% Class A USD Hedged Acc 1.60% 1.63% US Dollar Bond Class A EUR Hedged Dis 0.95% 0.98% Class A EUR Hedged Acc 0.95% 0.98% Class A1 EUR Hedged Dis 1.50% 1.53% Class A GBP Hedged Dis 0.96% 0.99% US Large Cap Class A EUR Hedged Acc 1.60% 1.63% Class A1 EUR Hedged Acc 2.35% 2.38% US Small & Mid-Cap Equity Class A EUR Hedged Acc 1.85% 1.88% Class A1 EUR Hedged Acc 2.35% 2.38%

13 PRODUCT KEY FACTS Schroder International Selection Fund Emerging Markets Debt Absolute Return Issuer: Schroder Investment Management (Luxembourg) S.A. April 2018 This statement provides you with key information about this product. This statement is a part of the offering document. You should not invest in this product based on this statement alone. Quick facts Management company: Investment manager: Depositary: Schroder Investment Management (Luxembourg) S.A. Schroder Investment Management Limited, located in the United Kingdom, internal delegation J.P. Morgan Bank Luxembourg S.A. Ongoing charges over a year*: Class A AUD Hedged Acc 1.87% Class A GBP Hedged Dis 1.87% Class A1 AUD Hedged Dis 2.27% Class A USD Acc 1.87% Class A EUR Hedged Acc 1.87% Class A USD Dis 1.87% Class A EUR Hedged Dis 1.87% Class A1 USD Acc 2.27% Class A1 EUR Hedged Acc 2.27% Class A1 USD Dis 2.27% Class A1 EUR Hedged Dis 2.27% Dealing frequency: Base currency: Dividend policy: Daily USD A, A1 and D Accumulation share classes Dividend will not be distributed but will be reinvested into the fund. A, A1 and D Distribution share classes The board of directors generally has discretion as to whether or not to make any distribution save for the Distribution share classes with fixed dividend policy which are subject to the disclosures below. Distributions may be paid out of capital and reduce the fund s net asset value. 1

14 Schroder International Selection Fund Emerging Markets Debt Absolute Return In respect of Distribution share classes with fixed dividend policy, the distribution amount per share is calculated as follows: dividend rate distribution frequency over a year net asset value per share on the record date. Details of the Distribution share classes with fixed dividend policy are set out below: Fixed Distribution Share Class Currency Distribution Frequency over a year Dividend Rate Class A1 USD Dis USD Monthly (12) 4.0% per annum Class A1 AUD Hedged Dis AUD Monthly (12) 4.0% per annum Class A1 EUR Hedged Dis EUR Monthly (12) 4.0% per annum Class A USD Dis USD Quarterly (4) 4.0% per annum Class A EUR Hedged Dis EUR Quarterly (4) 4.0% per annum Investors should note that a positive distribution yield does not imply a positive return. The board of directors will periodically review fixed distribution share classes and reserves the right to make changes. Financial year end of this fund: 31 December Minimum investment: A, A1 and D share classes: Initial EUR1,000 or USD1,000 (or equivalent); Subsequent investment EUR1,000 or USD1,000 (or equivalent) * The ongoing charges figure is based on the expenses for the year ended 31 December This figure may vary from year to year. Note: As of the date of this document, Class D shares of the fund are not being offered to the public in Hong Kong. What is this product? This is a sub-fund of Schroder International Selection Fund, a mutual fund domiciled in Luxembourg and its home regulator is Commission de Surveillance du Secteur Financier. Objectives and investment strategy Investment Objective The fund aims to provide an absolute return of capital growth and income by investing in fixed and floating rate securities in emerging markets. Absolute return means the fund seeks to provide a positive return over a 12 month period in all market conditions, but this cannot be guaranteed and your capital is at risk. Investment Policy The fund invests at least two-thirds of its assets in fixed and floating rate securities, currencies and money market instruments in emerging markets. The fixed and floating rate securities are issued by governments, government agencies, supra-nationals and companies. The fund may also hold cash. In aiming to deliver an absolute return, the fund may hold up to 40% of its assets in cash and money market instruments in developed markets. As the fund is unconstrained it is managed without reference to an index. The fund may invest in excess of 50% of its assets in fixed and floating rate securities that have a below investment grade credit rating (as measured by Standard & Poor s or any equivalent grade of other credit rating agencies). 2

15 Schroder International Selection Fund Emerging Markets Debt Absolute Return The fund may invest up to 100% of its assets in sub-investment grade fixed and floating rate securities (being securities with a credit rating below investment grade as measured by Standard & Poor s or any equivalent grade of other credit rating agencies) and unrated securities issued by corporate issuers in emerging markets. To achieve the investment objective and to make use of the best risk-return investment opportunities, the fund may invest more than 10% (but no more than 20%) of its net assets in debt securities issued and/or guaranteed by a single sovereign issuer (e.g. Hungary and Turkey which are, as at the date of this document, unrated or rated below investment grade) on the basis of, for example, economic fundamentals, country risk, security valuation and other compelling investment performance rationale. Due to market movements, as well as changes in credit or investment ratings, the fund s overall exposure to such assets may change over time. The above countries are for reference only and may change without prior notice to the investors. Investors should note that whilst the above sets out the expected maximum exposure to a single country of this nature, such exposure limit is not indicative of the funds holdings at any time in relevant countries. Where a fund invests more than 10% of its net asset value in debt securities issued by governments or agencies of any single country, adverse economic, market, political or regulatory conditions and unfavourable developments in a particular country or region will adversely affect the performance of the fund and may result in significant losses to investors. The fund is not subject to any limitation on the portion of its net asset value that may be invested in any country, region or sector. Under exceptional circumstances (e.g. market crash or major crisis), the fund may be invested temporarily up to 100% of its net asset value in liquid assets such as bank deposits, certificates of deposit, commercial paper and treasury bills for cash flow management. Use of financial derivative instruments ( FDI ) The fund may use FDI with the aim of achieving investment gains, reducing risk or managing the fund more efficiently. FDI may be employed for instance to generate additional income from exposure to credit risk in purchasing or selling protection through credit default swaps, adjusting the fund s duration through the tactical use of interest related FDI, generating additional income through inflation or volatility linked FDI or increasing its currency exposure through the use of currency related FDI. FDI could also be employed to create synthetic instruments. Such FDI include over-the-counter and/or exchange traded options, futures, warrants, swaps, forward contracts and/or a combination of the above. However, the fund does not intend to use FDI extensively for investment purposes. What are the key risks? Investment involves risk. Please refer to the offering document for details including the risk factors. 1. Risk relating to investment in debt securities Credit and counterparty risk Investment in debt securities is subject to the credit/default risk of the issuer which may also adversely affect the settlement of the securities. Interest rate risks Investment in the fund is subject to interest rate risk. In general, the prices of debt securities rise when interest rates fall, whilst their prices fall when interest rates rise. Below investment grade and unrated debt securities Investments in fixed income securities below investment grade or unrated are generally subject to higher degree of counterparty risk, credit risk, volatility risk, liquidity risk and risk of loss of principal and interest than higher rated securities. Credit ratings risk Credit ratings assigned by rating agencies are subject to limitations and do not guarantee the creditworthiness of the security and/or issuer at all times. 3

16 Schroder International Selection Fund Emerging Markets Debt Absolute Return Credit downgrading risk The credit rating of debt securities or their issuers may subsequently downgraded. In the event of such downgrading, the value of the fund may be adversely affected. The investment manager may not dispose of such securities immediately and the fund may therefore be subject to additional risk of loss. Liquidity and volatility risk Securities not listed or rated or actively traded may have low liquidity and higher volatility. The prices of such securities may be subject to fluctuations. The bid and offer spread of their price may be high and the fund may therefore incur significant trading costs and may even suffer losses when selling such instruments. Valuation risk Valuation of the fund s investment may involve uncertainties and judgmental determinations. If such valuation turns out to be incorrect, this may affect the net asset value calculation of the fund. 2. Emerging and less developed markets The fund may invest in emerging and less developed markets. Investing in emerging and less developed markets is subject to greater risks than investing in securities of developed countries such as ownership and custody risks, political and economic risks, market and settlement risks, liquidity and volatility risk, legal and regulatory risks, execution and counterparty risk, and currency risk, which may adversely affect the net asset value per share of the fund and investors may as a result suffer losses. 3. Sovereign debt risk Investment in sovereign debt obligations issued or guaranteed by governments or their agencies of certain developing countries and certain developed countries may expose the fund to political, social and economic risks. A government entity s willingness or ability to repay principal and interest due in a timely manner may be affected by various factors. In the event that a government entity defaults on its sovereign debt, holders of sovereign debt, including the fund, may be requested to participate in the rescheduling of such debt and to extend further loans to the relevant government entity. The fund may suffer significant losses in such events. 4. Below investment grade and non-rated sovereign securities risk The fund may have investment of more than 10% (but no more than 20%) of its net assets in securities issued and/or guaranteed by government, public or local authority of a single sovereign country that is unrated or rated below investment grade (e.g. Hungary and Turkey which are, as at the date of this document, unrated or rated below investment grade). Such investment would generally be considered to have greater market and credit risks than higher rated sovereign securities. The lower ratings of such sovereign securities reflect the greater possibility that adverse changes in the financial condition of the sovereign issuer, or the bankruptcy of the sovereign issuer, may impair the ability of the sovereign issuer to make payments of principal and/or interest. If the sovereign issuer of a security is in default or such a security performs badly, the fund may potentially suffer substantial loss. Where the fund invests a relatively significant portion of its net assets in countries belonging to same geographical region, the geographical concentration of the fund s investment may expose the fund to greater volatility and higher risk than investing in a more diversified portfolio. The market for these below investment grade or non-rated sovereign securities may be less active and the level of liquidity is relatively low, making it more difficult to sell the securities and hence adversely affecting the net asset value of the fund. 4

17 Schroder International Selection Fund Emerging Markets Debt Absolute Return 5. Absolute return objective While the fund aims to achieve absolute performance, there may be circumstances that negative returns could be generated. Investors should therefore not interpret it to mean or imply that absolute return is guaranteed. 6. Concentrated geographical locations The fund investing in concentrated geographical locations may be subject to a higher level of risks comparing to a fund investing in a more diversified portfolio/strategy. The value of the fund may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory event affecting the relevant geographical locations. 7. FDI The fund may use FDI to meet its specific investment objective. There is no guarantee that the performance of FDI will result in a positive effect for the fund. FDI exposure may lead to a high risk of significant capital loss. Risks associated with FDI include credit risk and counterparty risk, liquidity risk, valuation risk, volatility risk, over-the-counter transaction risks and hedging risk. The leverage element/component of an FDI can result in a loss significantly greater than the amount invested in the FDI by the fund. There is no guarantee that the desired hedging instruments will be available or hedging techniques will achieve their desired result. In adverse situations, the use of hedging instruments may become ineffective in hedging and the fund may suffer significant losses. 8. Risks relating to distributions For distribution share classes with a general dividend policy, expenses will be paid out of capital rather than out of gross income. The amount of distributable income therefore increases and the amount so increased may be considered to be dividend paid out of capital; capital growth will be reduced and in periods of low growth capital erosion may occur. Distribution share classes with a fixed dividend policy will distribute the dividends based on a fixed amount or fixed percentage of the net asset value per share. This may result in share classes with fixed distributions either paying out both income and capital in distribution payments, or not substantially distributing all the investment income which a share class has earned. Investments in distribution share classes with fixed dividend policy are not an alternative to a savings account or fixed-interest paying investment. The percentage of distributions paid by distribution share classes with fixed dividend policy is unrelated to expected or past income or returns of these share classes or the fund. The distribution can thus be higher or lower than the income and return that were effectively realised. Distribution share classes with fixed dividend policy will continue to distribute in periods that the fund has negative returns or is making losses, which further reduces the net asset value of the distribution Share Classes with fixed dividend policy. In extreme circumstances, investors may not be able to get back the original investment amount. Investors should note that a positive distribution yield does not imply a positive return. Distribution share classes with a fixed dividend policy do not distribute a fixed amount and the constant percentage of distribution results in higher absolute distributions when the net asset value of the relevant Distribution share classes with fixed dividend policy is high, and lower absolute distributions when the net asset value of the relevant distribution share classes with fixed dividend policy is low. 5

18 Schroder International Selection Fund Emerging Markets Debt Absolute Return You should note that in the circumstances where the payment of distributions are paid out of capital, this represents and amounts to a return or withdrawal of part of the amount you originally invested or capital gains attributable to that and may result in an immediate decrease in the net asset value of shares. The distribution amount and net asset value of the currency hedged share class may be adversely affected by differences in the interest rates of the reference currency of the currency hedged share classes and the fund s base currency, resulting in an increase in the amount of distribution that is paid out of capital and hence a greater erosion of capital than other non-currency hedged share classes. 9. Risks relating to hedging and the hedged classes In respect of the share classes which the management company of the fund has the ability to fully hedge the shares of such share classes in relation to the fund currency, currency exposures or currency hedging transactions within the fund s portfolio will not be considered. The aim of currency hedged share class is to provide you with the performance returns of the fund s investments by reducing the effects of exchange rate fluctuations between the share class s and the fund s base currency. However there is no assurance that the hedging strategies employed will be effective. Where undertaken, the effects of this hedging will be reflected in the net asset value and, therefore, in the performance of such share class. Similarly, any expenses arising from such hedging transactions will be borne by the share class in relation to which the expenses have been incurred. It should be noted that these hedging transactions may be entered into whether the reference currency is declining or increasing in value relative to the relevant fund currency and so, where such hedging is undertaken it may substantially protect investors in the relevant share class against a decrease in the value of the fund currency relative to the reference currency, but it may also preclude investors from benefiting from an increase in the value of the fund currency. There can be no assurance that the currency hedging employed will fully eliminate the currency exposure to the reference currency. 10. Currency risks Assets and share classes may be denominated in currencies other than USD and some may not be freely convertible. The fund may be adversely affected by changes in foreign exchange rates and exchange rate controls of the currencies in which securities are held, the reference currencies of the share classes and the US Dollar. This exposes all share classes of the fund to exchange rate fluctuations and currency risk. It may not be practicable or possible to hedge against such foreign exchange/currency risk exposure. 6

19 Schroder International Selection Fund Emerging Markets Debt Absolute Return How has the fund performed? 20% 16% 12% 8% 4% 0% -4% 17.4% 7.8% 6.5% 3.4% 1.0% % -1.2% -1.1% -1.2% Past performance information is not indicative of future performance. Investors may not get back the full amount invested. The computation basis of the performance is based on the calendar year end, NAV-To-NAV, with dividend reinvested. These figures show by how much the fund s Class A USD Accumulation increased or decreased in value during the calendar year being shown. Performance data has been calculated in USD including ongoing charges and excluding subscription fee and redemption fee you might have to pay. -8% Note -6.6% Fund launch date: 1997 Class A USD Accumulation launch date: 2000 The management company views the Class A USD Accumulation, being the retail share class denominated in the base currency of the fund, as the most appropriate representative share class of the fund. Note: The performance of these years was achieved under circumstances that no longer apply. During these years, there was material change(s) to the fund, namely, changes of investment objective and policy and reduction of fee(s). 7

20 Schroder International Selection Fund Emerging Markets Debt Absolute Return Is there any guarantee? This fund does not have any guarantees. You may not get back the full amount of money you invest. What are the fees and charges? Charges which may be payable by you You may have to pay the following fees when dealing in the shares of the fund. Fee What you pay Share class A A1 D Subscription fee (Initial charge) Up to 3.00% of the total subscription amount Up to 2.00% of the total subscription amount Nil Switching fee (Switching charge) Redemption fee (Redemption charge) Up to 1.00% of the value of the shares to be switched Nil Ongoing fees payable by the fund The following expenses will be paid out of the fund. They affect you because they reduce the return you get on your investments. Annual rate (as a % of the fund s value) Share class A A1 D Management fee 1.50% 1.50% 1.50% Depositary fee Up to 0.005% Performance fee Nil Administration fee Up to 0.25% Distribution charge Nil 0.50% 1.00% Custody safekeeping fee Up to 0.3% Transaction fees (charged by the Depositary) Up to USD150 per transaction Fund accounting and valuation fees Up to 0.015% Note: As of the date of this document, Class D shares of the fund are not being offered to the public in Hong Kong. Other fees You may have to pay other fees when dealing in the shares of the fund. Please refer to the offering document for fees payable by the fund. 8

21 Schroder International Selection Fund Emerging Markets Debt Absolute Return Additional information You generally buy and redeem shares at the fund s relevant net asset value ( NAV ) after Schroder Investment Management (Hong Kong) Limited receives your request, directly or via a distributor, in good order at or before 5pm HK time, being the fund s dealing cut-off time on each dealing day of the fund. Before placing your subscription or redemption orders, please check with your distributor for the distributor s internal dealing cut-off time (which may be earlier than the fund s dealing cut-off time). A dividend calendar including details on the distribution frequency and the dividend calculation basis for all available distribution share classes and a composition of the dividend payments (i.e. the percentages of distribution being paid out of capital and net distributable income) for the last twelve months for each of these distribution share classes (i) with a variable distribution policy or (ii) with a fixed dividend policy and paying dividends out of capital are also available from the Schroder Investment Management (Hong Kong) Limited on request and from the Schroders Internet site ( Past performance information of other share classes offered to Hong Kong investors is available online at The net asset value of this fund is calculated and the price of shares is published on each dealing day. They are available online at This website has not been reviewed by the SFC. Important If you are in doubt, you should seek professional advice. The SFC takes no responsibility for the contents of this statement and makes no representation as to its accuracy or completeness. 9